Broadcom Ltd

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AVGO : NASDAQ : Technology
$161.98 | %
Today's Range: 161.10 - 164.65
Avg. Daily Volume: 2,573,200
07/29/16 - 4:00 PM ET

Financial Analysis


BROADCOM LTD's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line. BROADCOM LTD has average liquidity. Currently, the Quick Ratio is 1.47 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 385.15% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)3541.01614.0
EBITDA ($mil)1229.0671.0
EBIT ($mil)189.0441.0
Net Income ($mil)-1186.0344.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)2041.02508.0
Total Assets ($mil)51407.010532.0
Total Debt ($mil)15008.04898.0
Equity ($mil)19702.04061.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin62.4463.14
EBITDA Margin34.741.57
Operating Margin5.3427.32
Sales Turnover0.170.58
Return on Assets-0.276.32
Return on Equity-0.2817.08
Debt Q2 FY16 Q2 FY15
Current Ratio2.524.5
Debt/Capital0.430.55
Interest Expense150.053.0
Interest Coverage1.268.32


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)394.81259.52
Div / share0.490.38
EPS-2.931.19
Book value / share49.915.65
Institutional Own % n/a n/a
Avg Daily Volume2620461.04267400.0

Valuation


HOLD. BROADCOM LTD's P/E ratio indicates a significant premium compared to an average of 35.97 for the Semiconductors & Semiconductor Equipment industry and a significant premium compared to the S&P 500 average of 25.05. To use another comparison, its price-to-book ratio of 3.21 indicates a premium versus the S&P 500 average of 2.81 and a discount versus the industry average of 4.20. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. The valuation analysis reveals that, BROADCOM LTD seems to be trading at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
AVGO 186.52 Peers 35.97   AVGO 23.73 Peers 26.17

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

AVGO is trading at a significant premium to its peers.

 

Average. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

AVGO is trading at a valuation on par to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
AVGO 12.45 Peers 18.96   AVGO 1.54 Peers 2.94

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

AVGO is trading at a discount to its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

AVGO trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
AVGO 3.21 Peers 4.20   AVGO -64.61 Peers -6.14

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

AVGO is trading at a discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, AVGO is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AVGO 7.13 Peers 4.88   AVGO 45.49 Peers 4.47

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

AVGO is trading at a significant premium to its industry.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

AVGO has a sales growth rate that significantly exceeds its peers.

 

 

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